SENATE BILL NO. 129 An Act relating to the state's chief procurement officer. Co-chair Frank directed attention to Amendments 1 and 2. He explained that Amendment No. 2 was drafted by Senator Randy Phillips in response to concerns regarding the Wildwood Prison acquisition. It requires that a lease-purchase agreement be approved by the legislature if real property is to be acquired. SENATOR RANDY PHILLIPS advised that the amendment results from a recent audit of the Wildwood purchase. He then deferred further comments to the legislative Auditor. RANDY WELKER, Legislative Auditor, Division of Legislative Audit, came before committee. He explained that the above- noted audit was issued by the Office of Management and Budget. A companion audit by the Division of Legislative Audit is underway. Information in the OMB audit concluded it was likely the purchase was divided to circumvent the legislative approval process when acquiring the facility. The OMB report recommends that Title 36 be amended to provide that all lease-purchase/lease-financing agreements require legislative approval, regardless of the dollar amount. Amendment No. 2 attempts to make that change. In response to a question from Senator Kelly asking if all lease-purchase/lease-finance arrangements would fall within approval requirements, Mr. Welker and Co-chair Frank clarified that Amendment No. 2 is intended to apply to real property acquisitions. Both concurred that amendment language does not so indicate at this time. End, SFC-93, #59, Side 1 Begin, SFC-93, #59, Side 2 Mr. Welker noted that legislative approval is not meant to cover items of personal property such as desks and computers. In response to a further question from Senator Kelly, Co- chair Frank explained that "real estate" is defined as land or "anything attached to land, including the building." If the state is acquiring a building, it must seek approval from the legislature. The Co-chairman noted the difference between leasing property and acquiring ownership. Co-chair Pearce asked if Amendment No. 2 would have to be amended to apply to real property. Co-chair Frank responded affirmatively. He then MOVED for adoption of Amendment No. 2 with addition of conceptual language applying it to real property. No objection having been raised, Amendment No. 2 was ADOPTED, subject to the conceptual addition. Co-chair Frank explained that Amendment No. 1 results from lack of department ability to negotiate with existing landlords under the new procurement code. It appears reasonable for the state to have this ability if a savings can be achieved. The proposed amendment provides an exemption from the procurement code to allow the department to negotiate with current landlords. The amendment also requires quarterly reports to the Legislative Budget and Audit Committee. The Co-chairman further noted need for review of amendment language by the Dept. of Law. He then MOVED for adoption of Amendment No. 1. Senator Rieger inquired concerning how renegotiations would be impacted if a cost savings was not achieved. Co-chair Frank explained that if the original lease contains a renewal option, that option could be exercised. If the lease has no provision for renewal or extension, and the state would have to go out to bid for like space, under the terms of the amendment the state could work with the existing landlord to achieve a reduced lease cost rather than going to bid. No objection to Amendment No. 1 having been raised, it was ADOPTED. DUGAN PETTY, Director, Division of General Services, Dept. of Administration, came before committee voicing support for the bill. He said it would provide a window of opportunity to renegotiate leases and obtain cost savings in return for the extension price. It will also provide leverage for ADA improvements needed at many sites. Further, it will allow the division to better deal with a growing workload crisis since renewal of existing leases requires less time and effort than putting space requirements out to bid. Senator Kelly asked if Range 23 was sufficiently high for the chief procurement officer. Mr. Petty voiced the department position that the range is appropriate. The bill was HELD in committee for Dept. of Law review of Amendment No. 1 language.